COINBASE SHARES DROPPED BY A LARGE MARGIN OWING TO REPORTS THAT THE EXCHANGE WILL BE PROBED BY THE SEC FOR AN OPERATIONAL INDISCRETION!
On news that Coinbase is being investigated by the Securities and Exchange Commission (SEC), its shares fell more than 21%. The regulatory body is looking at Coinbase to see if it allowed trading in assets that ought to be securities. The crypto exchange, however, makes no allegations of misconduct and appears unconcerned by the SEC’s intense focus on it.
Furthermore, according to Bloomberg, Coinbase has been engaged in a protracted legal battle with the SEC over alleged regulations governing digital assets. The American cryptocurrency exchange requested last week that the Commission put forth more explicit rules controlling the use of digital assets. As a result, Coinbase experienced the most significant decline, while other equities in the same industry also suffered. MicroStrategy (MSTR) and Marathon Digital (MARA) both had reductions of around 11%.
The significant drop in Coinbase shares coincides with a steep dip in the cryptocurrency market.
It seems that a few severe judgments may render a sizable section of the crypto market inoperable, the author continued. “The risk of harsher regulation has been a persistent headache for crypto,” he said.
Finally, he said that designating some digital currencies as securities while disqualifying others will make the current situation for brokerages even worse.
The SEC’s investigation into Coinbase is reportedly unrelated to the exchange’s suspected insider trading scheme. In addition, the regulator’s most recent investigation, which took place before the plan, led to at least three people being accused of fraud. A former product manager for Coinbase is among them, along with two other individuals.
Digital currencies have spurred discussions on how to govern them since they started gaining more public acceptance.
There are ongoing demands for US regulators to take additional action to monitor the developing cryptocurrency business effectively. Agitations call for more explicit rules of involvement and protection for novice investors from authorities. However, the debate over categorizing digital assets is still up for debate, particularly about the appropriate regulatory agency. Some contend that the SEC should be the overseer, while others assert that the Commodity Futures Trading Commission (CFTC) should.
Meanwhile, the SEC has frequently assumed the de facto role of crypto governance and classified some of the assets as securities. Moreover, since the exchange increased the number of tokens available for trading, the Commission’s investigation into Coinbase has become more intense.